DoD awards $187M for Armed Overwatch aircraft production, with L3Harris Technologies as prime contractor

Contract Overview

Contract Amount: $186,950,420 ($187.0M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2022-07-31

End Date: 2028-07-31

Contract Duration: 2,192 days

Daily Burn Rate: $85.3K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ARMED OVERWATCH PRODUCTION AIRCRAFT AND 2ND LOT

Place of Performance

Location: GREENVILLE, HUNT County, TEXAS, 75402

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $187.0 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: ARMED OVERWATCH PRODUCTION AIRCRAFT AND 2ND LOT Key points: 1. Contract value represents a significant investment in tactical aviation capabilities. 2. Competition dynamics for this contract are crucial for ensuring fair pricing. 3. Performance risk is moderate, given the nature of aircraft production and integration. 4. This contract supports the Air Force's strategic objectives for light attack aircraft. 5. The sector is characterized by high barriers to entry and specialized manufacturing.

Value Assessment

Rating: good

The contract value of $186.95 million for aircraft production appears reasonable within the defense aerospace sector. Benchmarking against similar production contracts for specialized aircraft would provide a more precise value-for-money assessment. The firm-fixed-price structure suggests that cost risks are largely borne by the contractor, which can be favorable for the government if the contractor manages costs effectively. However, without detailed cost breakdowns or comparisons to industry standards for similar aircraft, a definitive value assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. This approach is generally preferred as it fosters a competitive environment, potentially leading to better pricing and innovation. The number of bidders and the specific evaluation criteria would further illuminate the strength of the competition. A robust competition suggests that the selected contractor, L3Harris Technologies, offered the most advantageous proposal based on the government's requirements.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it drives down prices through market forces and encourages a wider range of solutions, ultimately leading to more efficient use of public funds.

Public Impact

The primary beneficiaries are the U.S. Air Force, which will receive advanced armed overwatch aircraft. The contract will deliver production aircraft essential for light attack and special operations missions. The geographic impact is primarily centered in Texas, where L3Harris Technologies is located. This contract is expected to support jobs in aerospace manufacturing and related technical fields within the United States.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if production complexities are underestimated.
Dependence on a single prime contractor could create supply chain vulnerabilities.
Ensuring timely delivery of aircraft to meet operational demands.

Positive Signals

Firm-fixed-price contract structure shifts cost risk to the contractor.
Awarded through full and open competition, suggesting competitive pricing.
L3Harris Technologies has a track record in aerospace manufacturing and defense systems.

Sector Analysis

The defense aerospace manufacturing sector is characterized by high technological sophistication, stringent regulatory requirements, and significant capital investment. Contracts for specialized aircraft like the Armed Overwatch are typically awarded after extensive research, development, and testing phases. The market size for such niche defense platforms is driven by specific military requirements and geopolitical factors. This contract fits within the broader category of tactical aircraft procurement, where spending can fluctuate based on defense budgets and strategic priorities.

Small Business Impact

While this contract is with a large prime contractor, L3Harris Technologies, the implications for small businesses are indirect. The prime contractor will likely engage numerous small business subcontractors for specialized components, materials, and services. The extent of small business subcontracting will depend on the prime's subcontracting plan and adherence to small business goals. This contract's success could foster a more robust ecosystem for small businesses supporting advanced aerospace manufacturing.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force contracting and program management offices. Accountability measures will include adherence to delivery schedules, quality control standards, and performance metrics outlined in the contract. Transparency is facilitated through contract award databases and reporting requirements. The Inspector General's office may conduct audits or investigations to ensure compliance and prevent fraud, waste, and abuse.

Related Government Programs

Light Attack Aircraft Programs
Special Operations Aviation Support
Tactical Aircraft Manufacturing
Defense Production Contracts

Risk Flags

Production Delays
Supply Chain Risk
Quality Control Issues

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $187.0 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P.. ARMED OVERWATCH PRODUCTION AIRCRAFT AND 2ND LOT

Who is the contractor on this award?

The obligated recipient is L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $187.0 million.

What is the period of performance?

Start: 2022-07-31. End: 2028-07-31.

What is L3Harris Technologies' track record with similar large-scale defense production contracts?

L3Harris Technologies has a substantial track record in defense contracting, including the production of various aerospace and electronic systems. The company has been involved in numerous complex programs for the Department of Defense and other government agencies. Their experience spans aircraft modification, sensor integration, and platform development. For instance, they have been a key player in programs involving intelligence, surveillance, and reconnaissance (ISR) aircraft and electronic warfare systems. This background suggests a capacity to manage large-scale production efforts, though the specific complexities of the Armed Overwatch program will be a key determinant of success. Their financial stability and existing manufacturing infrastructure are also positive indicators for fulfilling this contract.

How does the awarded value compare to industry benchmarks for similar aircraft production?

Direct comparison of the $186.95 million contract value for the Armed Overwatch production aircraft is challenging without specific details on the aircraft's capabilities, quantity, and complexity. However, the defense aerospace sector typically sees high per-unit costs for specialized military aircraft due to advanced technology, rigorous testing, and low production volumes compared to commercial aviation. For context, similar light attack or specialized ISR platforms can range from tens to hundreds of millions of dollars depending on customization and mission systems. The firm-fixed-price nature of this contract implies that L3Harris must absorb cost overruns, which is a positive sign for value if they manage production efficiently. Further analysis would require benchmarking against specific aircraft types with comparable performance envelopes and mission sets.

What are the primary risks associated with the production phase of this contract?

The primary risks associated with the production phase of the Armed Overwatch contract include potential production delays, quality control issues, and cost overruns (though largely borne by the contractor due to the FFP structure). Delays could stem from supply chain disruptions, manufacturing complexities, or integration challenges with specialized systems. Quality control is paramount for military aircraft to ensure safety and mission effectiveness; any lapses could lead to costly rework or performance degradation. While the firm-fixed-price contract mitigates direct cost overrun risk for the government, contractor financial distress due to unforeseen production costs could impact delivery timelines and overall program success. Furthermore, ensuring the availability of skilled labor and specialized materials throughout the production run presents an ongoing risk.

How effective is the 'full and open competition' approach likely to be in ensuring value for this specific contract?

The 'full and open competition' approach is generally considered the most effective method for ensuring value in government contracting, as it maximizes the pool of potential offerors and fosters price competition. For a specialized defense platform like the Armed Overwatch, this approach allows the Air Force to solicit proposals from all qualified manufacturers, potentially uncovering innovative solutions and competitive pricing. The success of this approach hinges on the clarity of the solicitation's requirements and the rigor of the evaluation process. If the competition was robust, with multiple capable bidders submitting proposals, it significantly increases the likelihood that the government secured the best possible value in terms of performance, cost, and schedule. The absence of sole-source or limited competition indicators further supports the expectation of competitive value.

What are the historical spending patterns for similar light attack or tactical aircraft programs within the DoD?

Historical spending patterns for similar light attack or tactical aircraft programs within the DoD show significant variability, driven by evolving mission requirements, technological advancements, and budget allocations. Programs like the AT-6 Wolverine and the A-29 Super Tucano, while having different origins and intended roles, illustrate the investment required for such platforms. These programs often involve substantial upfront costs for development and initial production runs, followed by sustainment, upgrades, and potentially further production orders. Spending can range from tens of millions for smaller fleets or specific modifications to hundreds of millions or even billions for larger, more complex programs over their lifecycle. The trend has been towards multi-role capabilities, enhanced sensor integration, and cost-effectiveness, making programs like Armed Overwatch a strategic investment in meeting these evolving needs.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 10001 JACK FINNEY BLVD, GREENVILLE, TX, 75402

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $191,206,763

Exercised Options: $191,206,763

Current Obligation: $186,950,420

Subaward Activity

Number of Subawards: 62

Total Subaward Amount: $33,598,202

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA863722DB001

IDV Type: IDC

Timeline